Crucial Job Creation Legislation Now Before Congress

May 20, 2010

By Elizabeth Lower-Basch

In the very near future, Congress is expected to consider a bill that includes key provisions that will create jobs and help vulnerable families continuing to struggle from effects of the nation's economic downturn.

The bill, the American Jobs and Closing Tax Loopholes Act of 2010, contains vital components that would help vulnerable families and states. The bill funds the TANF Emergency Fund for another year, provides funding for summer jobs for youth, extends unemployment insurance benefits for the long-term unemployed, and temporarily increases the share of Medicaid and child welfare costs paid for by the government.

  • Created by the American Recovery and Reinvestment Act, the TANF Emergency Fund provided $5 billion for fiscal years 2009 and 2010 to assist states in expanding services during the recession. States that increased spending on assistance, short-term non-recurrent benefits, or subsidized employment last year or during FY 2010 can receive 80 percent reimbursement of the increased costs.  

    The Emergency Fund, however, is scheduled to expire on September 30, 2010. The American Jobs bill would provide $2.5 billion to extend the TANF Emergency Fund for another year. States already have plans to create more than 180,000 jobs before the TANF Emergency Fund expires, almost all of which are in the private sector. These jobs would be lost without the Emergency Fund. Extending the TANF Emergency Fund is critical for struggling families as well as for states trying to create jobs for vulnerable populations.
  • Youth are facing an unprecedented crisis in employment- representing nearly a third of those who are currently unemployed across the country.  According to the Bureau of Labor Statistics (BLS), currently only 25 percent of teens between age 16 and 19 are employed, down from 37 percent just five years ago. For black teens that rate is only 16 percent.  Early work experience is critical to the development of work ethic and appropriate workplace skills, and it correlates with higher earnings in later years.  Moreover, disadvantaged teens who work are more likely to remain in high school than their peers who do not work.  

    The American Jobs bill would provide funding to support over 300,000 jobs for youth ages 16 to 21 through summer employment programs. Last summer, the Youth Workforce System under the Workforce Investment Act (WIA) demonstrated its ability to create jobs for disadvantaged youth through American Recovery and Reinvestment Act investments putting over 355,000 youth to work.  Funding jobs for youth will help communities to build on this success, provide youth with income to help support their families during these tough economic times and fuel demand in local economies through their spending.
  • Although the job market has shown some signs of recovery, unemployment remains at generational highs. Further, long-term unemployment is at record levels, with 45.9 percent of unemployed workers being out of work for six months or more in April 2010. The economy has created jobs for the last three months, but even if the current pace of jobs creation is sustained, it will take years to recover the millions of jobs lost throughout 2008 and 2009.

    The American Jobs bill would allow states to continue current levels of Unemployment Insurance benefits and COBRA health insurance subsidies for the long-term unemployed through the end of the year. This extension is crucial so that workers can avoid delays in receiving unemployment insurance benefits. This year, Congress has repeatedly passed short-term extensions of unemployment insurance benefits, but votes on these short-term extensions have been frequently postponed, resulting in harmful delays. An extension to the end of the calendar year would protect these crucial benefits from the whims of the political process, ensuring unemployed workers have needed support as they continue to search for jobs.
  • The bill also provides a six-month extension of the Recovery Act increase in the share of Medicaid and child welfare costs paid by the federal government, taking the increase to the end of most states' fiscal years. This extension would provide critical assistance to states facing budget shortfalls, helping avoid major cuts in needed services and layoffs of state and local employees.

The House will vote on the American Jobs Closing Tax Loopholes and Preventing Outsourcing Act imminently. The temporary spending in the legislation would help stimulate the economy as well as aid Americans who have been hardest hit by the recession.   Cutting these essential programs would risk crushing the fragile recovery that has begun.

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